The Indian Journal of Economics July 1941

If the choice made by the government results in the undevaluation of the currency by the exchanges the country will have to face a stabilisation crisis such as was experienced in the post-war period in Belgium and Germany or when it results in the overvaluation of the currency by the exchanges the country will have to face an adjustment crisis. [...] It will be observed that the difference between the actual price and the shipping parity is detemined by two factors : the course of the dollar rate and the movement of the market price itself.8 M. S ITARAMAYYA As the dollar price of gold is fixed while the sterling price is free fluctuations in the dollar rate tend to bring about fluctuations in the opposite direction in the sterling price o [...] In view of the expansion of gold supplies and the increase which has occurred in the value of gold in terms of the national currencies by the revaluation process the "Sterilisation" of gold with the object of preventing excessive expansion of the volume of money has come to receive increasing attention in recent years. [...] The reversal of the flow of capital in the last quarter of 1937 was mainly due to the stock market decline in New York and the fears of a depreciation of the dollar in terms of gold. [...] In the second type notably in the Argentine Denmark France and Italy the State while providing for its representation in the management of the Central Bank has widened the scope of interests represented on the Board of Directors.